Oil refinery in Carson, Ca. Refineries are among the greenhouse-gas emitters that will take part in California's cap and trade program. NICK UT, THE ASSOCIATED PRESS

California has just turned an important page in an unprecedented experiment in environmental policy.

The state is trying to lead the country, if not the world, toward a dramatic reduction in the emission of the greenhouse gasses that scientists say are responsible for global warming.

So far, the state's Air Resources Board has done this by mandating specific actions – the creation of low-carbon gasoline, the collection of methane gas from landfills, a reduction in emissions from consumer products (including aerosol cheese and dessert toppings), regulations to ensure that vehicle tires are properly inflated. And many more.

But last month the board added a new wrinkle to its regulatory framework – a market-based approach that gives polluters more wiggle room in deciding how to change their ways.

Rather than simply slapping a limit on every company's emissions, the state has set limits by industry, put a dollar value on the right to pollute, and then established a way for companies to trade those rights to one another.

The idea is that the companies for whom limiting emissions is cheapest will have permits to spare, which they can sell to companies for whom reducing emissions would be more expensive. The state thus achieves the greatest possible reduction in emissions with the least possible disruption to the economy.

The goal is to reduce emissions to 1990 levels by 2020, and 80 percent below that by 2050.

California has long been a leader in environmentalism, going back to the days when John Muir founded the Sierra Club. More recently the state has set a standard for the nation on clean water, clean air, and energy efficiency.

But this is different.

Climate change is, by definition, a worldwide phenomenon. And California's contribution to it is relatively small. California produces about 450 million metric tons of CO2 equivalent each year. To put that total in perspective, consider that it's less than the annual increase each year in China's emissions.

So even the most dramatic reduction imaginable in California's emissions would likely be swamped by the continued industrialization of China and the other developing nations.

What's more, unlike other pollutants, which make humans sick, the link between cause and effect is indirect with global warming. Carbon Dioxide, the most commonly cited greenhouse gas, is not by itself harmful to people. It is only when it rises into the upper atmosphere and creates a blanket that absorbs heat that would otherwise be lost to space that it becomes a problem.

California, then, is potentially bearing the costs for a policy that is intended to benefit the rest of the planet.

There are some local benefits. Limiting carbon emissions will require more energy efficiency and power plants that burn cleaner fuel. And the new rules could spawn a wave of new products and companies that help firms meet the standard. That might mean more jobs.

But this is uncharted territory, and the truth is that no one really knows what the economic or environmental effects will be. Business interests opposed to the state's plan say the costs will be a huge burden. Environmentalists and state regulators say the policy in the end will be a net-plus. And if California's policy sets an example that is followed by the nation and, later, the rest of the world, we could be responsible for a transformation of the planet.

For now, though, California is leading the U.S. in putting a price on carbon emissions.

In last month's auction, utilities, cement plants, refineries and other heavy industries were granted free permits to cover 90 percent of their current emissions. To cover the remaining 10 percent, they could either buy permits or reduce their emissions.

The state set a minimum price of $10 per ton of emissions, and all 23.1 million permits offered for sale for 2013 were sold, at an average price just above $10. For a typical cement plant with, say, about 700,000 tons of carbon emissions, that would translate into $700,000 for the permits needed to continue business as usual.

The auction raised about $230 million, much of which will go back to utility ratepayers to offset the expected increase in rates as utilities switch to cleaner fuels, including solar and wind power. Some of the money will also be used to promote low-carbon practices.

The cap on emissions will drop each year, and as it does, the permits are expected to become more expensive. That will make it more cost-effective for companies to change their operations rather than buy their way out.

To help prevent "leakage" of carbon emissions – and jobs – to other states, California's rules will also apply to imports of cement and electricity, among other products. But there is not much the Air Resources Board can do if its policies lead to a general increase in the cost of doing business here. And there-in lays the risk.

Ever the trendsetter, California is out on a limb this time. It appears unlikely that other states will follow our lead. If the national government also balks, as it has so far, it will be even more expensive to drive, build and use power here than it is elsewhere.

California will also be a more pleasant place to live, with cleaner air the likely byproduct of changes designed to reduce carbon emissions.

The question will be whether the benefits outweigh the costs and whether the jobs gained compensate for those that will likely be lost. We can only wait and see.

Daniel Weintraub has covered California public policy for 25 years. He is editor of the California Health Report at www.healthycal.org

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